The Ethiopian Deposit Insurance Fund (EDIF) has announced that it successfully collected 2.8 billion birr from its member commercial banks and small financial institutions over the past six months.
Desalegn Ambaw, CEO of EDIF, revealed that out of 80 member institutions, including 31 commercial banks and 49 small financial institutions, the fund has amassed the significant sum of 2.8 billion birr. He further explained that financial institutions have the option to make payments in two installments, with an initial 50 percent of the required capital of 0.4 percent already paid. The remaining balance will be completed within a two-year timeframe.
The government initially allocated 200 million birr for establishing the fund, with an additional 50 million birr designated for operational purposes thus far. Operating with ambitious targets, EDIF aims to collect a total of 6 billion birr within the fiscal year.
The purpose of the fund is to provide security and assurance to depositors who entrust their savings to commercial banks or small financial institutions. Under this system, depositors are guaranteed compensation in the event of bank or microfinance institution failures, ensuring their financial security.
Furthermore, every depositor in any financial institution, with deposits of up to 100,000 birr, is covered by this insurance scheme. A portion of the collected funds, amounting to 1.5 billion birr, has been invested in government treasury bonds, while the remaining 100 million birr has been deposited into the Mudarabah investment account of the Commercial Bank of Ethiopia in accordance with Sharia principles.
With this initiative, Ethiopia joins the ranks of 147 other countries worldwide that have established deposit insurance funds to safeguard depositor interests and bolster financial stability.
